As an entrepreneur, it’s important to know the difference between good debt and bad debt. Good debt comes in the form of loans, a mortgage or lines of credit that can be used to the company’s benefit. I call this productive debt.
Bad debt, for our purposes, is debt you can’t leverage when growing your business. I refer to this as reductive debt. It’s money that isn’t working for you in any productive way. Typically, it’s used to buy things you can’t really afford; when that happens, it will never produce a good outcome.
